Your client is a large hospital chain, K. Grace. There have been proposed legislation changes to Medicare that will affect your client. For example, some surgeries will no longer be reimbursable at the same rate.
As a result, this has caused the hospital to consider a strategy that would shift its focus toward less profitable surgeries by using alternative therapies. However, the client is concerned about the decreased revenue potential from this proposed shift in strategy.
Currently the client has a $4 billion top line. Surgeries represent half of this total. Half of the hospitals in the chain perform all of these surgeries. For this case, let’s say that all patients are on Medicare (private insurance is not a factor).
Should we close part of the chain? All of the chain? None of the chain? How would you approach this problem?
McKinsey Case Study Overview
Read the case prompt carefully to understand the problem you are being asked to solve. The client in this McKinsey case study is a hospital chain. Due to recent legislative changes to Medicare that threaten to cut into its profitability, the client is considering new strategies to keep profitability up. You are being asked to advise the client on this sticky situation.
The Profitability Framework is a great starting point for your case structure. However, the best candidates build a custom structure for the case by blending frameworks and their own business understanding.
The McKinsey case study has no math diagrams. This is an intermediate level case interview you would likely see in a McKinsey second round interview.
McKinsey Interview Tips
McKinsey places a high value on structure (i.e. organization). In the case, focus on maintaining structure the entire way through the case – structure in your analysis, in your notes, in your framework, in your communication, in your math, etc.
In this McKinsey case study, focus on identifying 1 area of weakness that you can work on going forward. One other thing: time yourself (2min to build structure and 2min to present it; 2min each for a brainstorming question; 2min for final recommendation).
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